8 Tips for Setting up a Children Activity Account

[Wendy Poling USAA]

by Chad Storlie

We all know a family is expensive - that is not new. Most of us have a college savings plan for the children’s future education. What we really need today is an account to help absorb a lot of the month-to-month variability that goes to paying for kid’s activities. What makes having children especially difficult is the vast array of unanticipated monthly expenses for children. Expenses range from friends birthday party gifts, summer camps, a school field trip, or additional fees for a child's birthday party. Most of the time, these expenses can be very difficult to accurately budget for because some of the expenses may be known only a few weeks in advance.

The solution is to create a Monthly Children's Activity Account for each child in your family. The purpose of the Children's Activity Account is to reduce the potentially large monthly budget swings for children's activities and provide a way to easily account for each child's expenses. The Children's Activity Account serves as a way to track, account, deposit, and spend for each child's various activity. For a workable, Children's Activity Account, there are some simple, workable guidelines to follow.

Here are 8 tips for creating a Children's Activity Account:

1. Start at Birth. Start a regular savings Account at birth for each child. Do not wait for the activities to start, start savings ahead of time.
2. Save a Set Amount Per Child Per Month. Save a set dollar amount per month per child. Save as much as you can in your budget, even if it is only $20-$25 dollars per child per month. This way you build a cushion for activities through their first years to help offset some larger initial costs when they enter school or begin swimming lessons. 
3. Keep a separate account per child. This seems like overkill until you start trying to account for the spending on three children over a summer of soccer, baseball, gymnastics, math tutoring, and a YMCA camp. The separate account per child helps you track and maintain the spending equally per child.
4. Increase the Amount by 5-10% Per Year. Nothing ever stays the same, do your best to increase your Children's Activity Account each year. A good rule of thumb is 5-10% per child per year to keep ahead of inflation and options that are more expensive as children age.
5. Don't Give In To Temptation. Protect this money from your regular checking and savings account as something that is dedicated to the children. It is very easy to rationalize moving from the Children's Activity Account "just this month" to pay an unexpected car bill, but once you do this then it disrupts the entire reason for a separate account.
6. Track Any Additional Amounts Annually. The Children's Activity Account is meant to smooth your budget on an annual basis. If you are Accounting the Children's Activity Account with additional outside, dollars then you have to look to increase the monthly per child amount.
7. Deposit Gift Money into the Account. Anytime your child gets gift dollars for the holidays or a birthday, put the gift into the Account. This way, you know that the gift will be used precisely as it was intended for the entertainment and education of your child.
8. Let the Children Help Set the Priority. Money education and tradeoffs are great pieces of conversation for kids at any age. The Children's Activity Account will never be big enough to Account EVERY activity. Let kids participate in helping set the priorities and decide which activities are Accounted and which are not. Children that know how to make and top balance financial tradeoffs with a disciplined and reasoned approach have a tremendous financial head start.

Fun and education for children rarely happen by accident. Making sure that Accounts are set aside to ensure great activities WITHOUT busting the budget is vital.

How are you planning for unexpected expenses when it comes to keeping up with your children’s activities? Share your ideas below.

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Chad Storlie is the author of two books: Combat Leader to Corporate Leader and Battlefield to Business Success. Both books teach how to translate and apply military skills to business. An adjunct Lecturer of Marketing at Creighton University and Bellevue University in Omaha, NE. Chad is a retired US Army Special Forces officer with 20+ years of Active and Reserve service in infantry, Special Forces, and joint headquarters units. He served in Iraq, Bosnia, Korea, and throughout the United States. He was awarded the Bronze Star, the Combat Infantryman’s Badge, the Meritorious Service Medal, the Special Forces Tab, and the Ranger Tab. In addition to teaching, he is a mid-level marketing executive and has worked in marketing and sales roles for various companies, including General Electric, Comcast, and Manugistics. He has been published in The Harvard Business Review blog, Business Week Online, Forbes, Christian Science Monitor, USA Today, and over 40 other publications. He has a BA from Northwestern University and an MBA from Georgetown University.

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